K-12 Taking Primacy in States' Targeting of Stimulus Dollars

Higher education may take second place on direct aid

Although precollegiate programs get the lion’s share of education aid under the federal economic-stimulus package, states are expected to use a considerable chunk of the nearly $100 billion in aid to restore cuts to—and even invest in—higher education programs.

But where they have discretion, policymakers in some states hit hard by the economic downturn, such as Nevada and Tennessee, appear to favor increasing, or maintaining, funding for K-12 schools over higher education.

That’s hardly a surprise, said David L. Shreve, the senior education committee director for the National Conference of State Legislatures, based in Denver. Typically, state higher education appropriations are "either feast or famine," he said. In lean times, states may be more inclined to trim higher education budgets, because they have a built-in funding mechanism: tuition.

The stimulus measure, signed into law in February and formally known as the American Recovery and Reinvestment Act, includes a $53.6 billion stabilization fund largely intended to help put education programs back on firmer fiscal footing. That money primarily is slated to restore reductions for fiscal years 2009 through 2011 previously made to K-12 and higher education.

Federal Guidance

If a state doesn’t receive enough money in the fiscal-stabilization fund to make both programs whole, it must use the money to restore spending levels proportionally to K-12 and higher education. If there is excess money from a $39.8 billion portion of the stabilization fund, it must flow to schools that receive money under the formula used to disburse Title I aid for disadvantaged students, according to guidance from the U.S. Department of Education.

Colleges and universities are eligible for funding under the stimulus package as part of nearly $8.8 billion in grants to be given directly to governors, also included under that stabilization fund. Those institutions may use stabilization money to mitigate tuition increases and to pay for modernization, renovation, and repair of facilities.

States are still sorting through the guidance from the Education Department, trying to determine how they’re allowed to spend the stimulus-program money. But in some states, K-12 programs appear to be prevailing in funding fights.

For instance, Nevada has applied for a waiver from the maintenance-of-effort requirement under the stimulus law because it can’t meet the necessary commitment to higher education, even though it has kept up appropriations at the required level for K-12. Nevada appropriated $2.3 billion for precollegiate programs in fiscal 2009, and Gov. Jim Gibbons proposed reducing that to $2.11 billion in fiscal 2010.

Under the stimulus law, states must maintain funding for all education programs at 2006 levels in order to be eligible for the federal aid.

But Mr. Gibbons, a Republican, wrote in a letter to U.S. Secretary of Education Arne Duncan that K-12 programs would suffer if his state doesn’t receive its stimulus funding. The waiver would ensure that the state receives $396 in stabilization dollars, according to the governor’s letter.

The money would help the state offset proposed decreases in K-12 education, Mr. Gibbons wrote, including plans to slice teacher pay by 6 percent, eliminate teacher signing bonuses and merit pay, and reduce teacher-training programs.

States are still waiting for federal guidance on which states will be eligible for waivers. Mr. Duncan has said he will look at how states cut education in proportion to other programs.

In Tennessee, Gov. Phil Bredesen said colleges and universities can expect $100 million in stimulus funding, restoring some funding cuts.

But Mr. Bredesen, a Democrat, made it clear his state would "completely protect and fully fund" K-12 programs. He also cautioned that the state’s higher education system shouldn’t expect the one-time federal money to become part of a permanent baseline.

"More than most other areas, higher education has dodged a bullet and bought some time, but there is a great deal of work to be done to reorganize and streamline for a much leaner future—to practice good stewardship," Gov. Bredesen warned in a March 23 budget speech.

Tennessee’s higher education system already is considering a major reorganization of its governing structure, in part to conserve resources after the stimulus money dries up, said Mary Morgan, a spokeswoman for the Tennessee board of regents.

On the other hand, states with brighter fiscal forecasts that haven’t cut K-12, such as Montana, are hoping to use some of the new funds to help out higher education. Gov. Brian Schweitzer, a Democrat, plans to use some of the largess to hold down tuition at public colleges and universities.

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